Soon after learning that the FCC would release it Open Internet Order, I started to read, skim and summarize. Nine or so hours later, I have generated a summary that should correctly provide the main points of this 400 page document. A better formatted version of the summary is available at:
http://www.personal.psu.edu/rmf5/.
http://www.personal.psu.edu/rmf5/.
So with the proviso that a more complete reading will uncover more, set out below is an overview.
Opting to find and
apply direct statutory links to establish lawful jurisdiction, the FCC’s 2015
Open Internet Order reclassifies broadband Internet access [1]
as common carriage with no distinction between wireline and wireless Internet
Service Providers (“ISPs”). [2]
The Commission chose to apply muscular rules and regulations rather than continue
treating ISPs as information service providers, subject to private carrier, government
oversight.
Reclassification
offers the opportunity for more clear-cut regulatory oversight. However, it certainly will trigger litigation
whether the FCC has engaged in rational decision making based on a complete record
evidencing substantially changed circumstances occurring in the ten years
running from 2005, when the FCC opted to classify Internet access as an
information service. [3]
The
FCC emphasized the need for narrowly crafted rules designed to “prevent
specific practices we know are harmful to Internet openness—blocking,
throttling, and paid prioritization—as well as a strong standard of conduct
designed to prevent the deployment of new practices that would harm Internet
openness.” [4]
The Commission emphasized that ISPs have
both the incentive and ability to leverage access in ways that can thwart the virtuous
cycle of innovation and investment in the Internet ecosystem:
The key insight of
the virtuous cycle is that broadband providers have both the incentive and the
ability to act as gatekeepers standing between edge providers and consumers. As gatekeepers, they can block access
altogether; they can target competitors, including competitors to their own
video services; and they can extract unfair tolls. [5]
The
FCC considers it essential that ISPs not have the ability to exploit Internet
access in anticompetitive ways that would reduce demand for Internet services. [6]
The Commission established a clear, ISP nondiscrimination rule:
Any person engaged
in the provision of broadband Internet access service, insofar as such person
is so engaged, shall not unreasonably interfere with or unreasonably
disadvantage (i) end users’ ability to select, access, and use broadband
Internet access service or the lawful Internet content, applications, services,
or devices of their choice, or (ii) edge providers’ ability to make lawful
content, applications, services, or devices available to end users. Reasonable network management shall not be
considered a violation of this rule. [7]
The
FCC also clarified and strengthened its requirement that ISPs operate with
transparency [8]
so that both retail broadband subscribers and upstream carriers and sources of
content understand the manner in which they can acquire broadband services. [9] However the FCC specified that its Internet
access requirements only apply to the retail practices of ISPs, vis a vis
downstream end users, and not to the terms and conditions of interconnection
between ISPs and other upstream carriers and sources of content. [10]
The
FCC now considers ISPs as gatekeepers standing between end users, who rely on common
carriage, telecommunications service and upstream content and applications still
treated as information services. [11] While the Commission determined that the
common carrier classification applies to both upstream and downstream interconnections,
[12]
it will refrain from applying the access restrictions on upstream
interconnection unless and until anticompetitive conduct arises. [13] Similarly the FCC specified that it will not
apply open Internet access rules on data services, which may traverse the same
networks used for Internet access. However,
the Commission will seek to ensure that ISPs do not use this exemption as a way
to evade the nondiscrimination requirements. [14]
The
FCC emphasized that while subjecting ISPs to Title II, common carrier
oversight, the Commission will use its statutory authority quite narrowly as
evidenced by the decision to forbear [15]
from applying “27 provisions of Title II of the Communications Act, and over
700 Commission rules and regulations.” [16] The Commission recognized the need to explain
how the new requirements satisfy pressing needs, but in the most narrow and
well calibrated matter in light of virulent opposition from most ISPs and the
two Republican Commissioners. The Order
reports that “there will be fewer sections of Title II applied than have been
applied to Commercial Mobile Radio Service (CMRS), [the regulatory
classification for wireless voice telecommunications service] where Congress
expressly required the application of Sections 201, 202, and 208, and permitted
the Commission to forbear from others.
In fact, Title II has never been applied in such a focused way.” [17]
The FCC opted not to construct an order
applying Section 706 of the Communications Act as the sole foundation for
creating narrowly calibrated non-common carrier rules applicable to ISPs in
their capacity as information service providers. The Commission interpreted the D.C. Circuit
Court of Appeals for the District of Columbia as limiting the scope and
efficacy of Section 706 based on the court’s determination that the FCC could
not impose common carrier duties, even though the court acknowledged that ISPs
perform a traffic carriage function for upstream sources of content, commonly
referred to as edge providers:
[A]bsent a classification of broadband
providers as providing a ‘telecommunications service,’ the Commission could
only rely on section 706 to put in place open Internet protections that steered
clear of regulating broadband providers as common carriers per se. Thus, in order to bring a decade of debate to
a certain conclusion, we conclude that the best path is to rely on all
available sources of legal authority—while applying them with a light touch
consistent with further investment and broadband deployment. Taking the Verizon decision’s implicit
invitation, we revisit the Commission’s classification of the retail broadband
Internet access service as an information service and clarify that this service
encompasses the so-called ‘edge service.’”
[18]
The FCC established “clear,
bright-line rules” prohibiting ISPs from blocking lawful traffic, deliberately
slowing traffic down absent legitimate network management requirements and
offering to managed and deliver traffic on a preferential basis, commonly known
as “paid prioritization.” The Commission’s ban on traffic blocking uses clear
cut language:
A person engaged in
the provision of broadband Internet access service, insofar as such person is
so engaged, shall not block lawful content, applications, services, or
non-harmful devices, subject to reasonable network management. [19]
The
FCC also establishes an absolute ban on throttling absent legitimate network management
requirements:
A person engaged in
the provision of broadband Internet access service, insofar as such person is
so engaged, shall not impair or degrade
lawful Internet traffic on the basis of Internet content, application, or service, or use of a non-harmful device, subject
to reasonable network management. [20]
To prevent ISPs from dividing the
Internet into fast-lanes offered at a premium with slow lanes constituting an
inferior baseline, the FCC prohibits paid prioritization:
A person engaged in the provision of broadband
Internet access service, insofar as such person is so engaged, shall not engage
in paid prioritization. ‘Paid prioritization’ refers to the management of a
broadband provider’s network to directly or indirectly favor some traffic over
other traffic, including through use of techniques such as traffic shaping,
prioritization, resource reservation, or other forms of preferential traffic
management, either (a) in exchange for consideration (monetary or otherwise) from
a third party, or (b) to benefit an affiliated entity [21]
In
addition to the specific prohibitions on blocking, throttling and paid
prioritization, the FCC established a general prohibition on ISP practices that
would unreasonably interfere with, or disadvantage downstream consumers and upstream
edge providers of content, applications and services. The Commission will consider on a
case-by-case basis whether an ISP has engaged in a practice “that unreasonably
interfere[s] with or unreasonably disadvantage[s] the ability of consumers to
reach the Internet content, services, and applications of their choosing or of
edge providers to access consumers using the Internet.” [22] The Commission opted to apply more open-ended
evaluative than legal standard prohibiting commercially unreasonable practices
it had proposed in the 2014 Open Internet NPRM.
The Commission concluded that it should “adopt a governing standard that looks to
whether consumers or edge providers face unreasonable interference or
unreasonable disadvantages, and makes clear that the standard is not limited to
whether a practice is agreeable to commercial parties.”[23]
The
FCC reported that it will use the “no-unreasonable interference/disadvantage”
standard to evaluate controversial subjects including the lawfulness of “sponsored
data” arrangements where an ISP accepts advertiser payment in exchange for an
agreement not to meter and debit the downstream traffic delivery. The Commission also will use this standard to
consider the lawfulness of data caps that tier service by the amount of
permissible downloading volume. In both
instances, the FCC sees the potential for an ISP to create artificial scarcity to
extract higher revenues, to favor corporate affiliates and third parties
willing to pay a surcharge as well as the potential for disadvantaging
competitors, e.g., using data caps to harm new vendors of video programming
that compete with an ISP service. On the
other hand, the Commission recognizes that service tiering can promote innovation
and new, customized services.
The Order expresses the view that reclassifying Internet access
as a telecommunications service provides the strongest legal foundation for the
Open Internet regulations, coupled with a secondary reference to Section 706 of
the Telecommunications Act of 1996 and Title III, which addresses the use of
radio spectrum and applies common carriage regulation to wireless voice
carriers. [24]
By using the stronger Title II foundation, the FCC asserts that it can
establish clear and unconditional statutory authority, but also use the
flexibility contained in Title II to forbear from applying most common carrier
requirements not relevant to modern broadband service just as occurs for
wireless telephone service. However with
a Title II regulatory foundation, the Order makes it possible for the FCC to
create an open Internet conduct standard that ISPs cannot harm consumers or
edge providers with enforcement tools available to sanction violations. [25]
While the debate over network neutrality has
become quite contentious and hyperbolic, the three core requirements imposed by
the Order have generated much popular support.
With the common carrier reclassification, the FCC considers it lawful to
impose explicit requirements that ISPs not: block, legal content, applications,
services, or non-harmful devices; throttle, impair or degrade lawful Internet
traffic on the basis of content, applications, services, or non-harmful
devices; or offer paid prioritization that would favor some lawful Internet
traffic over other lawful traffic in exchange for additional compensation, or
based on corporate affiliation.
The Order addresses the need for ISPs to have the ability to manage
their networks and to offer specialized services not available to all
users. The FCC seeks to promote
flexibility without creating a loophole for practices that violate network
neutrality. Coupled with requirements that ISPs operate with transparency in
terms of how they provide service, the FCC will permit deviations from absolute
neutrality on a case-by-case basis taking into consideration the particular
engineering attributes of the technology used as well as the rationale
supporting the legitimacy of the practice.
The
FCC will have to defend its legal right to reclassify services in light of
changed circumstances. Additionally the
Commission will have to convince an appellate court that the Communications Act
authorizes service reclassifications, or lacks specificity thereby allowing an
expert regulatory agency to clarify ambiguities.
[1]
The FCC defines “broadband
Internet access service” as: “A
mass-market retail service by wire or radio that provides the capability to
transmit data to and receive data from all or substantially all Internet
endpoints, including any capabilities that are incidental to and enable the
operation of the communications service, but excluding dial-up Internet access
service. This term also encompasses any
service that the Commission finds to be providing a functional equivalent of
the service described in the previous sentence, or that is used to evade the
protections set forth in this Part.” Protecting and Promoting the Open Internet,
GN Docket No. 14-28, Report and Order on Remand, Declaratory Ruling, and Order,
FCC 15-24, ¶25 (rel. March 12, 2015); available at: http://www.fcc.gov/openinternet. [hereinafter
cited as 2015 Open Internet Order].
[2]
The FCC previously had imposed
less stringent rules on wireless carriers in light of spectrum use, greater
potential for congestion and recent entry in broadband markets. The 2015 Open Internet Order treats wireless ISPs
no differently than wireline ISPs: “Today, we find that changes in the mobile
broadband marketplace warrant a revised approach. We find that the mobile broadband marketplace
has evolved, and continues to evolve, but is no longer in a nascent stage. As discussed below, mobile broadband networks
are faster, more broadly deployed, more widely used, and more technologically
advanced than they were in 2010. We
conclude that it would benefit the millions of consumers who access the
Internet on mobile devices to apply the same set of Internet openness
protections to both fixed and mobile networks.” 2015 Open Internet Order at
¶88.
[3]
“It is
also well settled that we may reconsider, on reasonable grounds, the
Commission’s earlier application of the ambiguous statutory definitions of ‘telecommunications
service’ and ‘information service.’” Id.
at ¶334. “The [Supreme] Court’s application of . . . [the] Chevron test in Brand X
makes clear our delegated authority to revisit our prior interpretation of
ambiguous statutory terms and reclassify broadband Internet access service as a
telecommunications service. The
Court upheld the Commission’s prior information services classification because
‘the statute fails unambiguously to classify the telecommunications component
of cable modem service as a distinct offering. This leaves federal
telecommunications policy in this technical and complex area to be set by the
Commission . . . .’ Where a term in the
Act ‘admit[s] of two or more reasonable ordinary usages, the
Commission’s choice of one of them is entitled to deference.’ The Court concluded, given the ‘technical,
complex, and dynamic’ questions that the Commission resolved in the Cable Modem Declaratory Ruling, ‘[t]he
Commission is in a far better position to address these questions than we are.’”
Id. at ¶332 (citations omitted).
[6]
“Broadband providers’ networks
serve as platforms for Internet ecosystem participants to communicate, enabling
broadband providers to impose barriers to end-user access to the Internet on
one hand, and to edge provider access to broadband subscribers on the
other. . . .[T]he record provides
substantial evidence that broadband providers have significant bargaining power
in negotiations with edge providers and intermediaries that depend on access to
their networks because of their ability to control the flow of traffic into and
on their networks. Another way to
describe this significant bargaining power is in terms of a broadband
provider’s position as gatekeeper—that is, regardless of the competition in the
local market for broadband Internet access, once a consumer chooses a broadband
provider, that provider has a monopoly on access to the subscriber. . . . Broadband providers can exploit this
role by acting in ways that may harm the open Internet, such as preferring
their own or affiliated content, demanding fees from edge providers, or placing
technical barriers to reaching end users. Without multiple, substitutable paths
to the consumer, and the ability to select the most cost-effective route, edge
providers will be subject to the broadband provider’s gatekeeper position.” Id.
at ¶80.
“a primarily technical network management
justification, but does not include other business practices. A network management practice is reasonable
if it is primarily used for and tailored to achieving a legitimate network
management purpose, taking into account the particular network architecture and
technology of the broadband Internet access service.” Id. at ¶32.
[8]
The enhanced transparency
requirements include the duty to disclose prices, including the full monthly
subscription charge, other fees and data caps and downloading allowances. Additionally ISPs will have to report on actual
network performance and disclose network practices, including congestion
management, application-specific behavior, device attachment rules and security. See
Id. at ¶¶164-69.
[9]
“A person engaged in the
provision of broadband Internet access service shall publicly disclose accurate
information regarding the network management practices, performance, and
commercial terms of its broadband Internet access services sufficient for
consumers to make informed choices regarding use of such services and for
content, application, service, and device providers to develop, market, and
maintain Internet offerings.” Id. at
¶23.
[10]
“[B]roadband Internet access service does not include
virtual private network (VPN) services, content delivery networks (CDNs),
hosting or data storage services, or Internet backbone services (to the extent
those services are separate from broadband Internet access service).” Id. at ¶190.
[11]
“Based on this updated record,
this Order concludes that the retail broadband Internet access service
available today is best viewed as separately identifiable offers of (1) a
broadband Internet access service that is a telecommunications service
(including assorted functions and capabilities used for the management and
control of that telecommunication service) and (2) various “add-on”
applications, content, and services that generally are information services.” Id.
at ¶47.
[12]
“[W]e find that broadband
Internet access service is a ‘telecommunications service’ and subject to
sections 201, 202, and 208 (along with key enforcement provisions). As a result, commercial arrangements for the
exchange of traffic with a broadband Internet access provider are within the
scope of Title II, and the Commission will be available to hear disputes raised
under sections 201 and 202 on a case-by-case basis: an appropriate vehicle for
enforcement where disputes are primarily over commercial terms and that involve
some very large corporations, including companies like transit providers and
Content Delivery Networks (CDNs), that act on behalf of smaller edge providers.”
Id. at ¶29.
[13]
“[W]e find that the best approach
is to watch, learn, and act as required, but not intervene now, especially not
with prescriptive rules. This Order—for
the first time—provides authority to consider claims involving interconnection,
process that is sure to bring greater understanding to the Commission.” Id. at ¶31.
[14]
“The Commission expressly
reserves the authority to take action if a service is, in fact, providing the
functional equivalent of broadband Internet access service or is being used to
evade the open Internet rules.” Id.
at ¶35.
[15]
47 U.S.C §160(a) authorizes the
FCC to streamline the scope of its Title II oversight by forbearing from
applying many common carrier requirements: “[T]he Commission shall forbear from
applying any regulation or any provision of this chapter to a
telecommunications carrier or telecommunications service, or class of
telecommunications carriers or telecommunications services, in any or some of
its or their geographic markets, if the Commission determines that—
(1) enforcement of such regulation or provision is
not necessary to ensure that the charges, practices, classifications, or
regulations by, for, or in connection with that telecommunications carrier or
telecommunications service are just and reasonable and are not unjustly or
unreasonably discriminatory; (2)
enforcement of such regulation or provision is not necessary for the protection
of consumers; and (3) forbearance from
applying such provision or regulation is consistent with the public interest.”
[16]
Id. at ¶5. The major provisions of Title II that the Order will apply are: nondiscrimination
and no unjust and unreasonable practices under Sections 201 and 202; authority
to investigate complaints and resolve disputes under section 208 and related
enforcement provisions, specifically sections 206, 207, 209, 216 and 217;
protection of consumer privacy under Section 222; fair access to poles and
conduits under Section 224, protection of people with disabilities under
Sections 225 and 255; and providing universal funding for broadband service,
but not the requirement to collect contributions to such funding through
partial application of Section 254.
[19]
Id. at ¶15. The FCC did opt
to eliminate rules that would establish a baseline, minimum broadband access
standard. It acknowledged practical and
technical difficulties associated with setting any such minimum level of access. Additionally the Commission concluded that the
no blocking and throttling rules would “allow broadband providers to honor
their service commitments to their subscribers without relying upon the concept
of a specified level of service to those subscribers or edge providers . . ..” Id. at ¶115.
[21]
Id. at ¶18. Even though one
can anticipate instances where a broadband subscriber would want ISPs to
provide higher quality of service to reduce the potential for degraded service
in the delivery of “must see” video content, the FCC largely forecloses this
option. ISPs cannot offer paid prioritization, even at
the voluntary request or approval of subscribers based on the Commission’s
apprehension that ISPs would abuse the opportunity by imbedding blanket authorization
in subscription service agreements. “[T]here is no room for a blanket exception
for instances where consumer permission is buried in a service plan—the threats
of consumer deception and confusion are simply too great. Id. at ¶19. However the FCC
will allow exceptions on an ad hoc basis using rigorous criteria. “The Commission may waive the ban on paid
prioritization only if the petitioner demonstrates that the practice would
provide some significant public interest benefit and would not harm the open
nature of the Internet.” Id. at ¶130. “First, the applicant must demonstrate that
the practice will have some significant public interest benefit, such as
providing evidence that the practice furthers competition, innovation, consumer
demand, or investment. Second, the
applicant must demonstrate that the practice does not harm the nature of the
open Internet, including, but not limited to, providing evidence that the practice:
• does
not materially degrade or threaten to materially degrade the broadband Internet
access service of the general
public;
• does
not hinder consumer choice;
• does
not impair competition, innovation, consumer demand, or investment; and
• does
not impede any forms of expressions, types of service, or points of view.” Id. at ¶131. Note that the FCC “anticipate[s]
granting such relief only in exceptional cases.” Id. at ¶132(citing extremely bandwidth intensive telemedicine
applications as an example worthy of an exception).
[23]
Id. at ¶150. The FCC
identified a number of factors it will consider in future evaluations. These include an assessment whether a
practice allows end-user control and is consistent with promoting consumer
choice, its competitive effect, whether consumers and opportunities for free
expression are promoted or harmed, the effect on innovation, investment, or broadband
deployment, whether the practice hiders the ability of end users or edge
providers to use broadband access to communicate with each other and whether a
practice conforms to best practices and technical standards adopted by open,
broadly representative, and independent Internet engineering, governance
initiatives, or standards-setting organization.
Id. at ¶¶139-145.
[24]
“We
ground the open Internet rules we adopt today in multiple sources of legal
authority—section 706, Title II, and Title III of the Communications Act. We marshal all of these sources of authority
toward a common statutorily-supported goal:
to protect and promote Internet openness as platform for competition,
free expression and innovation; a driver of economic growth; and an engine of
the virtuous cycle of broadband deployment.
We therefore invoke multiple,
complementary sources of legal authority. As a number of parties point out, our
authority under section 706 is not mutually exclusive with our authority under
Titles II and III of the Act.” Id. at
¶¶273-74.
[25]
With an eye toward providing timely,
certain and flexible enforcement of its open Internet rules, the FCC announced its
intention to use advisory opinions similar to those issued by the Department of
Justice’s Antitrust Division. “Advisory
opinions will enable companies to seek guidance on the propriety of certain
open Internet practices before implementing them, enabling them to be proactive
about compliance and avoid enforcement actions later. The Commission may use advisory opinions to
explain how it will evaluate certain types of behavior and the factors that will
be considered in determining whether open Internet violations have
occurred. Because these opinions will be
publicly available, we believe that they will reduce the number of disputes by
providing guidance to the industry.” Id.
at ¶229.